The Minnesota State House of Representatives and Senate approved sweeping new housing legislation this week totaling $1 billion, which is designed to address affordable housing access and down payment issues for first-time home buyers.

Housing advocates estimate that roughly 5,000 households will qualify for the bill’s rent assistance program in the form of rent vouchers, and the state is expected to spend $46 million for statewide rent assistance beyond the two-year budget cycle.

The bill will also devote $150 million to down payment assistance for first-time homebuyers in the state, which advocates say will help create 5,000 new homeowners in Minnesota. Eligible beneficiaries must verify they have a parent who has never owned a home or lost one through foreclosure.

An additional $45 million will be distributed to a homelessness prevention program.

While some members of the Minnesota Democratic-Farmer-Labor Party (DFL) — the state-based affiliate of the national Democratic Party — feel that the measure falls short in a few areas, housing advocates call it an important first step, according to reporting from the Minnesota Star Tribune.

The bill will be funded by a quarter-cent sales tax increase in the Twin Cities metro area, in addition to applying “hundreds of millions from the state surplus” to the bill’s programs.

Gov. Tim Walz (DFL) is expected to sign the measure into law once it reaches his desk. The tax increase is slated to go into effect on October 1 and will not apply to food, clothing or other items exempt from the sales tax.

Current estimates project that the tax increase will generate $353 million over the next two years, which raises $1 for every $400 in applicable purchases.

This is the most that the state of Minnesota has committed to housing in recent history, according to the Star Tribune. However, a sizable portion will be sourced from the state’s current budget surplus and will end after the next two-year budget cycle.

“Only the money from the metro sales tax and another $50 million from the state’s general fund, most of which will be devoted to rent aid, will be sustained in future years,” the Star Tribune reported.

Republican lawmakers in the state legislature have spoken out against tax increases during a time of budget surplus, and have also attributed rising housing costs to overregulation, contending the bill does nothing to address that issue.

The actions of the Minnesota legislature align with the focus on housing legislation by lawmakers in other states. This week, Washington Gov. Jay Inslee (D) signed a series of bills into law to address the state’s housing affordability, supply and homelessness challenges.

At the federal level, a group of bipartisan U.S. senators recently introduced a bill aiming to address housing issues in rural America.

Minnesota legislature approves $1B affordable housing bill
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